Apprenticeship Levy sees number of apprenticeships plummet

Apprenticeship starts are falling because of the Apprenticeship Levy, says the Federation of Master Builders (FMB), which believes the tax scheme needs to be made more flexible.

The FMB’s reaction is in response to statistics published this month by the Department for Education, which show that there has been a 24% fall in apprenticeship starts for the 2017/18 academic year compared with the previous academic year.

According to the figures, there were 375,800 apprenticeship starts reported for the 2017/18 academic year, compared with 494,900 in 2016/17 and 509,400 in 2015/16, a decrease of 24.1% and 26.2% respectively.

Commenting, FMB chief executive Brian Berry said: “Apprenticeships are falling and the Government must take urgent action to reverse the decline. At the recent Conservative Party Conference, the Government announced much-needed reforms to the Apprenticeship Levy but these do not go far enough. From April 2019, large firms will be allowed to pass 25% of Levy vouchers down through the supply chain to smaller firms but the FMB is calling for this to be increased to 100%. This is an important change because in construction, it’s the smaller firms that train more than two thirds of all apprentices.

“Conversely, large firms don’t tend to directly employ or train tradespeople. If the Government is serious about creating three million quality apprenticeships by 2020, it must ensure the Apprenticeship Levy works for the construction industry.”

Mr Berry concluded: “These alarming apprenticeship figures come hot on the heels of the recently published Migration Advisory Committee (MAC) report, which outlined some worrying recommendations for the UK’s post-Brexit immigration system. The Government’s initial reaction was to accept the MAC report’s recommendations. This is deeply concerning as the report suggests that the supply of ‘low-skilled’ migrant workers should be severely limited. The construction industry relies heavily on low skilled workers, such as labourers, who are essential to any construction site.

“What’s more, Level 2 tradespeople, such as bricklayers and carpenters, will be deemed low skilled and, therefore, severely limited in number. This is unwise given the construction skills shortage and insulting given the amount of knowledge and skills these individuals possess.”

The FMB believes changes in the workforce available to companies in the UK means the country should be looking to train British-based apprentices to fill the skills gap and meet demand from within the construction sector.

Mr Berry explained: “New figures show that there were 2.25 million EU nationals working in the UK in from July to September 2018, 132,000 fewer than one year earlier – that’s the steepest fall on record. It is therefore even more vital that the Government listens to the industry and reforms the Apprenticeship Levy before it is too late. We need to be training more UK-born apprentices to reduce future reliance on migrant workers from Europe or else the construction sector will grind to a halt. We need tens of thousands more apprentices and tens of thousands of migrant construction workers – of all skill levels.”